Plaza Home Mortgage Plans to Go Public

Plaza Home Mortgage Corp. is planning its first sale of stock to the public, joining a flurry of private companies in Orange County that are taking advantage of a strong stock market to raise financing.

The Santa Ana mortgage company plans to offer 5 million common shares for $11 to $13 each, according to a filing Wednesday with the Securities and Exchange Commission. At that price, the offering would raise $55 million to $75 million, before expenses.

Plaza Home is the 12th company in the county to go public this year. That surpasses by one the total number of local companies that went public last year, reflecting a national upswing in public offerings in 1992.

Investment analysts say tight credit and the lure of potential profits from the strong stock market are persuading many private companies to convert to public ownership.

“It’s an ideal time to go public,” said William Mais, an investment analyst with the Chartist, an investment newsletter in Seal Beach. “Anybody that needs capital, no matter what business, should be rushing to the stock market.”

If the offering is completed, Plaza Home Mortgage, which specializes in home loans, will become the holding company for Plaza Savings, which last year posted $9.2 million in earnings on revenue of $32.8 million.

Plaza Home plans to use proceeds from the offering to pay for mortgage loan originations, mortgage loan servicing and for general corporate purposes, said David N. Krinsky, an Irvine attorney for Plaza Home.

“The idea is to continue to grow in the business,” said John T. French, chairman of Plaza Home, which has been operating for 6 1/2 years.

Although many companies go public to pay for expansion, research or capital projects, others--such as Irvine’s Enhanced Imaging Technologies Inc.--use the money to pay off debts.

Enhanced Imaging, which began trading Wednesday on the NASDAQ exchange, plans to use much of the $13.7 million from its recent public offering to pay off its July, 1991, debt-financed acquisition of Optical Devices in Camarillo, said Jack Worley, chief financial officer for the Irvine firm.

Enhanced Imaging opened Wednesday at $12 a share and closed at the same price Thursday after gaining 25 cents a share on its first day of trading.

Steve DeLuca, a research analyst with Cruttenden & Co. in Irvine, said investors who are moving their money from certificates of deposit or money market accounts should be wary of companies whose public offerings are composed mainly of shares sold by management or whose proceeds are mostly used to reduce debt.

“There’s nothing wrong with a little profit-taking or payment of debt,” he said. “But do you want your money to go into an insider’s pocket? In an ideal world, you want your money to fuel growth.”

Plaza Home’s Krinsky said final approval for the offering should come within 90 days. The company’s stock would trade on NASDAQ under the symbol PHMC, according to the company’s prospectus.

Kidder Peabody & Co., Paine Webber and Mabon Securities will be the underwriters for the offering, Krinsky said.